Google's Cookie Phaseout: Impact on Digital Marketing

What are third-party cookies?

If you live in the UK or an EU country, you are likely familiar with the ‘cookie bar’ that appears on nearly every website you visit. This feature was introduced as part of the EU’s General Data Protection Regulation (GDPR) under the ‘Cookie Law,’ which requires websites to obtain users' consent before collecting, using, or sharing their personal data.

Third-party cookies are small data files set by a domain different from the one the user is visiting. In digital marketing, these cookies can track user activity on platforms like Google and its Chrome browser. Marketers use the information gathered to target users with specific keywords.

For example, while visiting a website, an advertisement from a different company may load on the page. That advertisement could use third-party cookies for various purposes, such as:

1. Tracking - These cookies monitor user behaviour across websites. The collected information helps marketers target advertising, develop strategies, and gather feedback.  

2. Personalisation -  Data collected from your browsing history can reveal your preferences, allowing ads to be tailored to your interests.

3. Analytics - The data collected helps understand user behaviour better, such as which pages are visited and how long users stay on the site.

Is the internet always listening?

Whilst third-party cookies have many benefits, there are also many concerns, partially around data protection and customer consent. Following the 2020 regulations around cookies, other browsers, such as Firefox and Safari, followed Google’s lead and banned or partially banned third-party cookies from their sites. 

This was due to the concerns around users having (or not having) the ability to limit or block the use of third-party cookies.

Since then, there have been many legislation changes around the world that have led to a more consistent and transparent approach with regard to the use of third-party cookies. These laws have aimed to give users better control of their personal data, which may be the reason behind Google's change of direction. 

Short-term impact of Google’s cookies

In the short term, there is a sense of confusion and uncertainty surrounding online tracking. Technically, nothing has changed yet. For now, those of us without a crystal ball are advised to continue using third-party cookies.

Google's announcement regarding the continued use of third-party cookies, alongside the upcoming launch of the Privacy Sandbox—an initiative that will not utilise these cookies—has added to the confusion. As Google prepares to introduce its alternative solution, marketers have the opportunity to adjust their strategies to align with the ongoing trend of phasing out third-party cookies.

Google’s long-term solution

Going forward with the U-turn on cookies doesn’t imply that it will be a free-for-all regarding data, as it was before the 2020 legislation. What we do know about Google’s Privacy Sandbox is that it will prioritise user privacy. Future data collection strategies will need to be adjusted to rely less on third-party cookies and explore alternative tracking methods.

While the details of the Privacy Sandbox are still unclear, there are several indications of the direction it may take.

The rise of first-party data

In Google's statement about its new Privacy Sandbox, it mentions ‘privacy-preserving alternatives’ to cookies on websites. We have seen Google move towards first-party data models with Google Analytics, removing the need for cookies to be placed on your website to gather data. 

First-party data refers to data that has been gathered directly from customers through website interactions, email subscriptions, loyalty programmes, etc. First-party data can provide a deeper understanding and more valuable insights into customers.

Data gathered directly from customers can be leveraged from strong brand-customer relationships, encouraging users to share data, their opinions, and experiences in exchange for loyalty, discounts, and community.  

How Google plans to use first-party data

Google's shift away from third-party cookies is part of a broader move towards privacy-focused advertising. They aim to focus on:  

1. Enhance User Privacy - Reducing reliance on third-party cookies helps protect user privacy and data security.

2. Improved Ad Targeting - First-party data allows for more accurate and relevant ad targeting, leading to better user experiences and higher conversion rates.  

3. Strengthen customer relationships - By collecting and analysing first-party data, businesses can build stronger customer relationships through personalised marketing campaigns and tailored offers.

4. Future-Proof Marketing Strategies - As the digital advertising landscape evolves, businesses that invest in first-party data strategies will be better positioned to adapt to changing regulations and consumer expectations.  

Google has built this into three areas:

Google's Privacy Sandbox is a comprehensive initiative designed to protect user privacy while still enabling targeted advertising. It introduces several key technologies:

Topics API

The Topics API is a privacy-focused approach to interest-based advertising. It categorises users into groups based on their browsing history, assigning them a limited number of "topics" each week. Enabling targeted ads based on user interests. These topics are then shared with websites and advertisers, allowing them to show relevant ads without tracking individual users, mitigating the risk of browser fingerprinting.  

FLEDGE (First Locally-Executed Decision over Groups Experiment)

FLEDGE is a technology that allows advertisers to bid on ad auctions locally on a user's device. This reduces the amount of data shared with third-party servers and helps to protect user privacy.  A less intrusive alternative to traditional advertising.

FLoC (Federated Learning of Cohorts)

FLoC was an earlier technology proposal that aimed to group users into cohorts based on their browsing behaviour. However, due to privacy concerns and technical challenges, it has been largely abandoned in favour of the Topics API.  

To get the most out of your first-party data, Google recommends businesses:

• Collect high-quality data: Ensure that the data collected is accurate, relevant, and up-to-date.  

• Implement robust data management practices: Use data management platforms (DMPs) to organise, segment, and analyse first-party data.  

• Build strong customer relationships: Encourage customers to share their data through loyalty programs, email subscriptions, and other channels.  

• Leverage machine learning and AI: Use advanced technologies to extract insights from first-party data and personalise marketing campaigns.  

A new way of thinking

As marketers move forward with first-party data, they need to rethink their approach to effectively targeting their audience. One strategy that can be employed is contextual targeting. This approach involves placing ads based on the content of web pages instead of focusing on individual users. By doing so, marketers can gain a better understanding of user intent and context.

For example, consider a user who searches for "best running shoes" on Google. Instead of showing ads for the latest fashion trends, Google can display advertisements for running shoe brands, fitness equipment, or sports nutrition products. This targeting is effective because the search query clearly indicates the user’s interest in running and fitness.

While Google's initial plans to phase out third-party cookies have been temporarily delayed, the industry is still moving towards a more privacy-focused future. Marketers must adapt to this changing landscape by prioritising first-party data, exploring contextual targeting, and embracing new technologies like the Privacy Sandbox. By understanding these shifts and implementing effective strategies, businesses can continue to reach their target audience and drive growth.